Sorry to shout... but in addition to some of the comments above, I would be remiss for not mentioning that I don't see how we can avoid significant increases in inflation.
The government is printing money that it then uses to buy its debt. That is called "monetizing debt" and the only consequence is increased inflation.
For those around in the late 70's and early 80's we know what this looks like.
strict(er) laws preventing some of the normal day to day operations of some or most investors.
Policy changes within the lenders continually changing making it harder for investors.
Newb investors or overly greedy investors making horrible decisions resulting in lawsuits and continued black eyes in REI as well as more and more laws which goes hand in hand with the first one.
While there will probably always be some way around these things as they progress it seems like 'speculation' is getting harder and harder to do.
We have been in a time of great change for a few years. One thing I see now, and still coming, is the emergence of private lending and mortgages as a major force.
A huge vacuum has been suddenly left by the banks retreating, and capital will find return. Private capital. There are more cash deals than ever. Where is all the cash coming from? Private money.
Amen to that Jon ... guys on this very forum like J Scott and now Will and Rich have figured that out and are helping fill this void while making a nice return on their $$!
Hang on to your checkbook because it's guaranteed coming to your market soon:
Changes in capital gains taxes on real estate, and it's going to hurt bad.
Already, you can't move into a rental, live in it, and then sell tax free. Only the years you live in it are tax free and you owe capital gains on the years it was rented. (ouch, there goes my retirement plan)
I suspect that the home owner's exemption will go away. 1031 might be removed.
The government is greedy for funding and currently thinks that it should come from the wealthier Americans. Guess who that includes. You guys with the tax loopholes?
Jon is right. Banks are going to continue to have high level of foreclosures in residential as well as commercial for at least another couple of years. Borrowers will need to look at private money more closely.
Yeah Tod, we're starting to see problem real estate loans for banks concerning commercial mortgages as well - the latest to take hits in this real estate slump.
Rental years before January 2009 are forgiven in the new Housing Bill horrible that it is.
Once two years of residency are established you can rent your place as long as the five year lookback includes that residency of two years. That's the scenario I'm living and my CPA (after much review) says cap gains exemption will work.
Sorry to shout... but in addition to some of the comments above, I would be remiss for not mentioning that I don't see how we can avoid significant increases in inflation.
The government is printing money that it then uses to buy its debt. That is called "monetizing debt" and the only consequence is increased inflation.
For those around in the late 70's and early 80's we know what this looks like.
Sorry to shout... but in addition to some of the comments above, I would be remiss for not mentioning that I don't see how we can avoid significant increases in inflation.
The government is printing money that it then uses to buy its debt. That is called "monetizing debt" and the only consequence is increased inflation.
For those around in the late 70's and early 80's we know what this looks like.
Peter, I agree with you and am buying all the RE that I can to ride that huge wave that appears to be building on the horizon.
But, what do you say to those economists that are predicting a sustained deflationary period? They say the commodities and RE deflation of the past couple years is the beginning of a long term trend. Any credence?
If you are in a position to bet both ways, do it! What I mean by this is-
1. inflation- buy real estate. Check many of my recent posts and I believe BUY BUY BUY!!!!!! I practice what I preach as you know. I'm buying like crazy
2. No inflation and loans being difficult to obtain for short term. My plans are to put cash on hold to prepare for short term loans. As I've said before, EXORBITANT rates. But, if you're making enuff, in a short period of time, ny rates may be the key to borrower making big bucks. I may br the last resort. Rich in FL.
I've been leaning toward inflation as a key factor for some time, for the reasons mentioned above.
However, I think there is a strong possibility of a deflationary environment that may balance the inflation drivers, and perhaps even win out.
Lots of folks were getting pretty close to retirement. The leading edge of the baby boomers is just heading into that point. Unfortunately, too many drank the kool aid and were heavily invested in stocks. They took hits of 40% or more on their portfolios. It takes a 66% increase to get back to just where they were. Even if stocks return 10% over the next few years (doubtful, IMHO), it will take 6 years just to make up the loss. If they retire anyway, and stick with their adviser's 4% guideline (take 4% of your pot each year), they're looking at 40% less income than they expected. No more using houses as ATMs, many are probably still in debt, and may be underwater. No more free and easy credit. I think we're going to see less spending, and that may well hold inflation in check.
If the feds can't stoke inflation to make it easier to pay down the massive debt taken on by both this administration and the previous one, I see significant tax increases. There will really be no choice. And, as P NW points out, RE may well be a target.
I really wonder if its not a good time to just take the hit and convert IRAs to Roth IRAs, or even just grab the cash with penalties. 28%, 33% or 35%, even with a 10% penalty may well look pretty good 10 years from now.
The loan situation is ugly. Its spreading into commercial right now, too. Short term ballons are common there, and I see owners being unable to refi. That looks to me like it means prices for commercial will fall as badly as we've already seen in residential. If not more, because there are fewer buyers for large properties. So, yet another chunk of wealth lost.
SOme very good points of view and thought on this subject. Keep them coming BP Nation, that is exactly what makes US so STRONG!
I also agree with Rich's three words - BUY, Buy, Buy!
Commercial will definately be showing some great deals in the coming years, buildyour capital now to take advantage!
the money supply has went from 1.2 trillion to 1.6 trillion under Mr. Obama's watch. And since it is being handed to the banks, give it a multiplier of 10:1
There are three things that I can see happening:
1. Simple inflation
2. dollar collapse within the next 90 days and spiral into hyper inflation
3. Both of the choices may and probably will occur. Devaluation has already occurred in the now-factual doubling of the base currency, though its "formal" effect is staved off by fear in gov'ts outside our borders as well as inside our borders.
I will do a longer post about this in the housing bubble forum
the money supply has went from 1.2 trillion to 1.6 trillion under Mr. Obama's watch. And since it is being handed to the banks, give it a multiplier of 10:1
There are three things that I can see happening:
1. Simple inflation
2. dollar collapse within the next 90 days and spiral into hyper inflation
3. Both of the choices may and probably will occur. Devaluation has already occurred in the now-factual doubling of the base currency, though its "formal" effect is staved off by fear in gov'ts outside our borders as well as inside our borders.
I will do a longer post about this in the housing bubble forum
Jeff, Wow! That's a giant increase in money supply. What are you doing to protect and profit from this extreme scenario?
I really wonder if its not a good time to just take the hit and convert IRAs to Roth IRAs, or even just grab the cash with penalties. 28%, 33% or 35%, even with a 10% penalty may well look pretty good 10 years from now.
.
funny you should mention that...my wife and myself were kicking around this idea just this last weekend....and i'm a licensed financial advisor! ;)
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I've also considered the same thing ... even met with my CPA and pointed out: 1) good year to do it since my income is down 2) taxes are only going to increase 3) not bullish on stock market 4) lending options for me limited to hard money 5) i can earn the kind of return in real estate to offset the huge penalities for early withdrawal .... haven't convinced myself yet but interesting to hear others considering the same thing. :lol:
This may be wishful thinking because I have a stage I, II, III vision for growing my business - and stage III is new construction of very small, highly efficient, completely or nearly self sufficient, and well designed homes. Stages I and II will produce the capital to fund III.
But I see the market changing towards smaller and smarter is better as energy costs continue to rise and 'green' just gets more and more fashionable.
Instead of 4,ooo+ sf homes with indoor pools and such, I can see people and agents hyping homes' efficiency ratings, low energy costs, solar panels, gardening space, and safe (chemical free) environments for your kids (low VOC paints, more natural building materials, etc). I can see a lot of unhappy people stuck with unsellable McMansions heated with $4 a gallon oil and paying new luxury taxes due to their inefficiency.
I see a lot of 100 YO "mansions" near downtown that have been converted to half a dozen small apartments or condos. Wonder if we'll see another round of conversions on the McMansions?
I see a lot of 100 YO "mansions" near downtown that have been converted to half a dozen small apartments or condos. Wonder if we'll see another round of conversions on the McMansions?
I'm sure people will try whatever they can to unload them. But from a design and energy efficiency standpoint, it will be nearly impossible to compete with manufactured homes and multis designed from the ground up for efficiency.
I'm excited about the future of manufactured homes - many of them look like custom homes already, not trailers. And the construction methods can so easily make them stronger, tighter, customizable, and cheaper compared to a custom.
These 100 YO homes have a huge advantage that they're often close to downtown (Denver) or the university (Greeley.) The McMansions around here are often in far-flung locations and spread out on very large lots. If we do end up in a high energy price environment (though, I don't think $4 gas is that), these may well just be abandoned.
I have a hard time getting my head around the modular homes. There are some in my area, but they're always very obvious. Don't know what others would think, but to me they look only marginally better than mobile homes.
I fully buy the idea they can be better built in a controlled factory. I'm not so sure about transportation costs, once all the costs of getting the materials to the factory, then the finished units to the installation site area included.
Jon, we stayed in one of your 100 year old mansions last week. It has about 10 suites and stays booked up pretty well. The family who bought it had to evict the "homeless" and did a complete historically correct rennovation.